Effect and Nature of Minor’s Agreement

What is the effect of minor’s agreement?

Anyone who is under the age of 18 is known as a minor. Every agreement with minors is void from the beginning. It is null and void hence there is no legal obligations arising from a minor’s agreement and contract per se hence nobody who has not attained the age of majority can enter into a contract. 

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  1. No Liability arising out of the Contract: – A minor is unable to give consent, and the nature of the minor’s agreement is void and cannot be enforced.
  2. Rule of Estoppel: – Estoppel is a legal rule of evidence that prevents a party from making an allegation that contradicts what was previously stated. The court considered that the doctrine of estoppel does not apply to a case in which the person knows the facts, beforehand and here the defendant’s counsel knew that the plaintiff was a minor. Therefore this rule does not apply.
  3. Restoration of Benefits: – As per Section 64 of the Indian Contract Act, when a person at whose option a contract is void, the other party is not required to perform it. This applies to Void contracts, but a minor’s contract is void, and therefore, he cannot be asked to return the amount to the moneylender.

As per Section 10 of the Indian Contract Act, 1972 all agreements are not contracts. Only those agreements are contracts that are made by the parties who are competent to enter into the contract. Further, the word ‘competent’ is described in Section 11 of the Indian Contract Act.

What are the rules relating to agreement with minor parties?

Although, as a general rule, a contract with minors is void, we must keep in mind the following rules as well: –

  1. A contract with a minor is void and, hence, no obligations can ever arise on him thereunder;
  2. The minor party cannot ratify the contract upon attaining majority unless a law specifically allows this;
  3. No court can allow specific performance of a contract with minors because it is void altogether;
  4. The Partnership Act also prohibits minors from becoming partners in a firm. They can, however, receive the benefits of partnership and ratify the same upon attaining majority;
  5. The rule of estoppel under evidence law does not apply to minors under contractual obligations. In other words, even if a minor forms a contract claiming majority age, legal obligations cannot arise against him;
  6. Parents or guardians of minors can name them in contracts only if it benefits them. But even in this case, the minor cannot be personally liable.
  7. We can say that majority of a person is one of the essential before entering into a contract.

What is the nature of Minor’s Agreement?

Nature of Minor’s Agreement: – A minor is one who has not attained the age of 18, and for each contract, a majority is a condition. As per Indian law, the nature of minor’s agreement is that the agreement with a minor is null and void, meaning that it has no value in the eyes of the law and it cannot be enforced by either party in the contract. Minor is considered incompetent to contract under the Indian Contract Act. This is so because minors are not mature enough to be responsible with respect to legal matters. Even after attaining majority, the same agreement could not be ratified by him. Here, the difference is that the minor’s contract or minor’s agreement is null and void, but it is not illegal because there is no statutory provision on it.

From Section 10 and Section 11 of the Indian Contract Act, it is clear that a person due to infancy or being minor is unable to contract within the meaning of the Indian Contract Act. As a result, a minor’s agreement is voidable and cannot be enforced by the party to the contract.

Agreement with Minor Parties

Section 11 states that only persons who have attained majority according to the law are competent to contract. Therefore, there must be a law that defines the age of majority. In India, the Indian Majority Act, 1875 declares the age of majority of all persons to be 18 years. If a minor has a guardian or Court of Ward looking after him, his age of majority becomes 21 years. Hence, any contract with a party below the age of 18 years is invalid as per the Act.

A very important case that had explained this issue is Mohiri Bibi vs. Dharmodas Ghose. In this case, a minor had borrowed some money from a money-lender by mortgaging his house. The money-lender moved to take possession of the minor’s house when he defaulted payment. The court, however, said since an agreement with minor parties is void, the money-lender could not enforce this contract.

Indian courts have repeatedly used this judgment to abrogate minors from contractual obligations. Hence, minors cannot enter into agreements unless some legal provisions allow them.

For example, a minor cannot transfer property as per the Transfer of Property Act. He can, however, receive property from other persons under a legal contract.

What are the exceptions to the general rule of minor’s agreement?

To give protection to the minor, his agreement is void. But there are some exceptions as well. They are as follows: –

  1. When the Minor has Performed his Obligation: – In a contract, a minor may be a promisee and not a promisor. So if the minor has performed his part of the promise, but the other party (promisor) has not, then the minor being in the position of a promisee can enforce the contract.
  2. Contracted by the Minor’s Guardian for his Benefit: – In that case, a minor can sue the other party when it does not perform its part.
  3. Contract of Apprenticeship: – Under the Indian Apprentices Act, 1850, a contract of apprentice entered by the guardian on minor’s behalf is binding on the minor.

What are the necessities supplied to a minor?

If any person who is incapable of entering into a contract and he is supplied with necessities of life by another person, the person who is supplying can get compensation from the property of the incompetent person including a minor. But if the minor does not have the property of his own, then he is not bound to give compensation for the same.

Can a minor be a partner?

A contract can only be considered to be a valid contract if both the parties to the contract are major. However, an exception as per Section 30 of the Partnership Act is that with the proper consent of all partners, a minor may be admitted for the benefit of the partnership for a period of time. But the minor will not be held liable for any of his act.

Liability of a minor under the Negotiable Instruments Act

According to Section 26 of the Act, a minor can draw, support and negotiate and except himself he can bind everybody. According to law everyone who is capable of contracting, he can bind himself and be bound by the making, drawing, accepting, delivery and negotiation of a cheque, promissory note or bill of exchange.

Can a minor be an agent or a principal?

A minor can never be a principal because for someone to be such a principal, he must be of the age of majority and be of sound mind and since a minor is not competent to contract, he cannot be appointed as a principal. But, a minor may become an agent as per the provisions of section 184, but the principal shall be bound by the acts of the minor and he shall not be personally liable in that case.

Case laws under Effect and Nature of Minor’s Agreement

  1. Kuwarlal vs. Surajmal
    • Regarding the requirements provided to the minors, it was held that the house given to the minor on rent to live in it and to continue his studies is part of the requirements, and therefore he is entitled to the payment of rent from the minor’s property.
  1. Kundan Bibee vs. Sree Narayan
    • Sree Narayan, while he was a minor, received some goods from Kundan Bibee in connection with his business and was indebted to him, when he obtained the majority, he took some more money and executed a bond to pay Kundan Bibee the total amount. In an action by Kundan Bibee to recover the said amount, it was argued by Sree Narayan that he was not liable to pay as they were entitled to be his minority. However, Sree Narayan was made liable to pay the full amount as a new consideration was attached.
  1. Suraj Narayan vs. SukhuAheer
    • In a related case, a person borrowed some funds during his minority period and after attaining the age of majority, he made a fresh promise to pay that amount and interest, but this contract was not enforceable due to the reason that consideration during the age of minority is a good consideration.
  1. Mohori Bibee vs. Dharmodas Ghose
    • The defendant, Dharmodas Ghose, a minor, had mortgaged his property in favour of the moneylender, Brahmo dutta, for securing a loan of Rs. 20,000. Mr. Brahmo dutta authorized Kedar Nath to enter into the transaction through a power of attorney. Mr Kedar Nath was told about the fact that Dharmodas Ghose was a minor through a letter sent by his mother.
    • However, the mortgage deed contained a declaration that Dharmodas Ghose was of the age of minority. The mother of the defendant sued on the ground that the mortgage executed by her son is void on the ground that her son is a minor.
    • The relief sought by the defendants was granted and an appeal was made before the Calcutta High Court by the executors of Brahmo dutta. The same was rejected.
    • Thereafter an appeal was made to the Privy Council. The Privy Council said that: –
      • A contract with a minor is void-ab-initio.
      • The Section 7 of the Transfer of Property Act, 1882 states that a person competent to enter into a contract is competent to transfer property.
      • Therefore, the mortgage executed by the defendant is void.
      • However, if a minor enters into a contract and commits part of its obligations, the other party may be forced to perform and fulfill its obligations, and in such cases, the contract is legally enforceable.

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